The push for liquefied natural gas (LNG) exports from US shores has often been compared to a gold rush, and like a mining boom of yore it seems to have stirred up a fair bit of speculation.

Speculation tends to spring up around good, easily understood stories. And, short of pulling nuggets of precious metal from the ground, what could sound better than buying American natural gas at $4 per million British thermal units and reselling it in Japan for $16?

This of course, leaves out a few crucial complications, like the complexity of securing financing and regulatory approval for these massive and massively costly capital projects, not to mention the considerable cost of liquefying all that gas, shipping it half way across the globe as methane and then turning it back into gas at the other end of the voyage.

But so, anyway: LNG fever is upon us. It spiked another couple of degrees on Friday when the US Department of Energy (DOE) approved a second major Gulf Coast LNG export project. The $10 billion Freeport LNG project from ConocoPhillips (NYSE: COP) and private investors aims to export up to 1.4 billion cubic feet per day (Bcf/d) of LNG, starting in 2017, from the Texas coastline south of Houston. It was the only the second US LNG export approval and the first in two years, after the 2011 green light for the comparably costly Sabine Pass LNG, which plans to export up to 2.2 Bcf/d, starting with a smaller volume in early 2016.

Another score of projects await DOE approval, and along with the two already OK’d they would have an aggregate maximum export capacity of nearly 30 Bcf/d, which would equal 43 percent of last year’s average US daily consumption, just to give an idea of the contemplated scale.

Source: Federal Energy Regulatory Commission

Of course, some of the plans probably won’t pan out, and fewer still may ultimately ramp up to full capacity. But last week’s action on the Freeport project suggests other approvals will follow in the coming months and years, despite controversy about gas producers’ environmental record and complaints from the industrial and utility consumers about all that cheap gas getting sent abroad.

But where the old gold rushes were democratic and chaotic as thousands of prospectors scoured the land, LNG projects are just the opposite. Because of the scale and the expense, they’re closely coordinated, centrally planned schemes, in which several big customers must commit to purchases for 20 years or longer before a single storage tank or pipeline is installed.

The cost and time scale are problems for investors, who must make long-term assumptions about unpredictable and volatile markets. And the diverse corporate lineups in this game, involving numerous investors, operators, financiers and customers, can make it hard for the casual observer to follow the ball and find the opportunity to profit.

The purest and most aggressive play on the LNG exports theme remains Cheniere Energy (NYSE: LNG), the Louisiana terminal operator behind the Sabine Pass project. Its huge cost, $10 billion or so to reach the permitted capacity and billions more for two additional LNG processing units, or trains, has led Cheniere to vest ownership of the facilities in a related MLP, Cheniere Energy Partners (NYSE: CQP), that’s serving as a fundraising vehicle.

By the time Sabine exports come on line, LNG will own just under half of CQP, financing partner Blackstone Group (NYSE: BX) will hold another 41 percent and 10 percent will have been bought by the public. Because this project is the most advanced, we can hazard an educated guess about its economics.  The first four of the six planned LNG trains, processing the full amount of natural gas currently authorized by the government, will produce annual Ebitda of $2.3 billion, which will be needed to cover the more than $900 million of yearly interest costs on debt expected to total more than $10 billion, Cheniere estimated in a recent investor presentation.

The parent company will be entitled to its half of distributions from the partnership, which has been making a fixed payout quarterly for the last six years and currently yields 5.7 percent. In addition, CQP will provide Cheniere’s marketing unit with a side stream of discounted LNG that could produce up to $1 billion of annual cash flow for the parent entity by the time the first four LNG trains are in operation.

Add up the CQP distributions, the potential profit on the supplied LNG and tolls from the pipeline linking the facility to interstate gas transport, and Cheniere might have $1.7 billion or so of annual Ebitda by the end of 2017. If we discount that cash flow at a reasonable 6 percent annual financing rate, we get a present-day value of not quite $1.3 billion. But to get that cash flow CQP will take on all that debt. of which Cheniere’s share will add up to more than $5 billion, in addition to its current 6.5 billion market cap, for an enterprise value of more than $11.5 billion.

That still works out to a reasonable EV/Ebitda multiple of somewhere around 9, though we’ll have to wait four years to know exactly how well this back-of-the-envelope math approximated real life contingencies. And this doesn’t assign any value to Cheniere’s plans to export more natural gas from a separate facility in Corpus Christi, Texas,  or to other projects it might undertake.

In any case, Cheniere shareholders are unlikely to be overly concerned about the future now that the share price has doubled in six months. CQP has appreciated more than 60 percent from its November lows. Despite the attractions of a steady dividend, the parent company remains a more attractive play, the one more highly leveraged to the timely and trouble-free completion of each of the project’s three production stages.

Other projects will lead you to other stocks. But in the case of ConocoPhillips, for example, even a big LNG operation will remain an afterthought next to the oil giant’s drilling interests. As with Blackstone, investors would be buying much besides the LNG, though COP and BX are attractive investments in their own right, ones that are cheaper and safer than Cheniere.

Alternately, Sempra Energy (NYSE: SRE) hopes to export LNG from the present-day Cameron import terminal just east of Sabine Pass, and to that end has just signed up two Japanese conglomerates and a French trading concern to invest at least $6 billion in return for half of the equity in the project and a guaranteed LNG supply.

This project would move the needle more for Sempra than Freeport will for ConocoPhillips. But investors would also be buying into a California gas utility, albeit one with a 3 percent yield and a stock near an all-time high.
 
Other companies with US LNG export projects on the drawing board include Energy Transfer Equity (NYSE: ETE), which inherited plans to export LNG via the Trunkline LNG terminal in Lake Charles, Louisiana, when it acquired Southern Union last year.

Meanwhile, Dominion Resources (NYSE: D) has applied to export LNG from the Cove Point import terminal in Chesapeake Bay, and that project’s proximity to the abundant gas supply from the Marcellus Shale as well as Europe and the Arctic route to Asia makes its economics look especially promising.

Still, investors in any of these undertakings are assuming a lot of project risk as well as the certainty of increased competition as other operations come on line. We would prefer, in the idiom of the gold rush, to sell shovels to the prospectors rather than gamble on a particular claim.

For example, recent Growth Portfolio recommendation (and recent Warren Buffett investment) Chicago Bridge & Iron (NYSE: CBI) is a leading designer and builder of LNG infrastructure, and could land as much as $3 billion in orders from the Freeport project alone, according to one analyst’s estimates. And CBI is likely to be involved in similar projects elsewhere.

Meanwhile, Conservative Portfolio holding Teekay LNG Partners (NYSE: TGP) is bidding on the long-term tanker leases to transport the LNG from Sabine Pass, the CEO said on the recent conference call. And whereas a multitude of projects means increased competition for investors in a particular facility, CBI and TGP will benefit with every one that comes on line. TGP yields a helpful 6.2 percent, and its fleet is conveniently all booked up until the LNG exports start ramping up in 2016.

Golar LNG (Nasdaq: GLNG) is a weaker TGP competitor, and its stock has rallied 10 percent in the wake of the Freeport approval, investors counting on the rising tide of LNG to lift all boats capable of moving methane. But CBI and TGP are our top LNG export plays, with an honorable mention to Cheniere for speculators with high risk tolerance.
 
LNG exports are a great story and an iffy investing proposition. But they will certainly benefit both the US and the world economies.